Crowdfunding: Fertile ground for female-founders

  • Thursday 15th February 2018

If you’re a female entrepreneur, crowdfunding can be one of the best ways to raise the finance you need to grow your business.

In 2016, one-third of all deals into female-founded companies came from crowd-funding, so this is clearly a route to finance that women are favouring.

Access to finance for entrepreneurs is often the key that unlocks significant growth for a business. With around half of business started by women*, and female-led businesses proven to generate a better return for investors*, it’s great to see how crowdfunding is really making an impact in democratising the funding marketplace to capitalise on this potential.

In crowdfunding, on average 15% of all deals, and 8% of the cash invested is going to female founders* [Beauhurst]. This in stark contrast to the overall venture funding market, where we see only 2.7% of funds going to women-led businesses*, and compared to private equity and VC deals where only 10% of deals and 1.75% of cash invested goes to women entrepreneurs* [Beauhurst]. 

What is also exciting to know is how successful women are at crowdfunding. At Crowdcube, looking at the historical stats up-to June 2017, female-led campaigns had a success rate of 75% compared to 55% achieved by their male counterparts.

So why is crowdfunding such fertile ground for women entrepreneurs? Here’s my take on it:

  1. We’re strong communicators. We can tell a story better than anyone, and a crowdfunding pitch enables us to play to this strength. We’re passionate about our businesses and this shines through on a video. We’re honest and open; investors trust us, because they know we don’t over-egg the pudding. And investors are drawn magnetically to that passion and integrity.

  2. We tend to build mission-driven consumer businesses. Women often establish businesses that are aimed at solving problems for other women, their families, their communities or wider society, and tend to lean towards building consumer brands in the fashion, retail, beauty, food and drink, creative and social sectors. Investors can easily relate to and understand these types of businesses, and the ‘patient capital’ in crowdfunding is a good fit for brands that inherently need to build over the medium to long term. Plus, our businesses often have a loyal and passionate customer and fan base that wants to support and benefit from our growth by investing - crowdfunding is the perfect vehicle for this.

  3. Women investing in women. There are more female angel investors on the crowdfunding platforms than we see in the wider venture funding world. This helps to balance out any ‘unconscious bias’ that exists in the funding process, so that we don’t get trapped in a cycle of ‘white men investing in white men who make stuff for white men’. 24% of Crowdcube's 490,000-strong investor community are women, compared to only 5% of venture partners* and 12% of angel investors*. The more exciting female-focused businesses there are on crowdfunding platforms, the more female investors will be attracted, thus in turn attracting even more women entrepreneurs, thus correcting gender imbalance in the market.

Julia’s top 3 tips for Crowdfunding success

  1. Ready… It’s all in the preparation; your Offer and Pitch need to be beyond compelling, and presented in a professional and engaging way to have investors eating out of your hands. Invest in your pitch assets so that they do you justice, and enable you to stand out from the crowd.
  2. Set… You’ve got to have momentum before you launch your campaign to the public; that means getting your trusted tribe and key investors excited and committed in advance. Be targeted and considered about your approach, and once you go live you’ll find your campaign pre-loaded with backers. 
  3. Go! Plan your campaign like a military operation to keep that momentum going. Build a strong communication plan for all key stakeholders, make the best use of all the marketing channels at your disposal, and keep the faith throughout the campaign so that you maintain velocity and smash though your target.
Julia Elliott Brown I CEO and Founder of equity fundraising consultancy Enter The Arena

Guest author: Julia Elliott Brown I CEO and Founder of equity fundraising consultancy Enter The Arena

Julia is the UK’s leading equity fundraising expert and specialist coach, working exclusively with women entrepreneurs.

As a serial entrepreneur, Julia has successfully raised millions of pounds in equity finance for business growth from crowdfunding, angels and VCs, both for her own business, and has supported dozens of her amazing female founder clients in doing the same.

With 20+ years commercial experience in high-growth start-ups, Julia’s mission and passion is to bring her wealth of expertise to support women entrepreneurs on their own journeys to successful equity fundraising and crowdfunding.